While Ten-X’s latest Industrial Market Outlook Report focuses on the markets investors need to pay special attention to, it also details employment in specific industrial sectors, market vacancies and valuation indexes on a year-over-year basis. Cap rates in Q4 2015 (at 6.6 percent, down 40 bps from one year ago) also are outlined, as is deal volume, which skyrocketed 55 percent from $50 billion in all of 2014 to $77.5 billion in all of 2015.

2015-2019 U.S. Industrial Projections:

Top 5 Buy Markets

2015 Rents (per square foot)

2019 Rents (per square foot forecast)

2015 Vacancies (percentage)

2019 Vacancies

(percentage forecast)

Atlanta

$3.77

$4.16

12.2%

11.1%

Nashville, Tenn.

$3.41

$3.77

6.1%

5.4%

Memphis, Tenn.

$2.52

$2.74

13.2%

11.2%

Los Angeles

$6.10

$6.79

3.3%

3.6%

Austin

$5.19

$5.56

8.5%

6.0%

Top 5 Sell Markets

2015 Rents

(per unit)

2019 Rents (per square foot forecast)

2015 Vacancies

(percentage)

2019 Vacancies

(percentage forecast)

Houston

$4.10

$4.20

8.0%

9.4%

Dallas

$3.76

$3.92

11.9%

13.6%

Fort Worth, Texas

$3.43

$3.64

9.4%

10.1%

San Antonio

$4.16

$4.44

6.9%

7.8%

Pittsburgh

$3.99

$4.24

8.8%

9.0%

2015 Rents

(per unit)

2019 Rents (per square foot forecast)

2015 Vacancies

(percentage)

2019 Vacancies

(percentage forecast)

U.S.

$4.55

$4.92

8.5%

8.2%

The Industrial Sector’s Top Five Buy Markets*:

Atlanta

With its economy in expansion mode, Atlanta’s metro employment is up to an all-time peak — currently expanding at 3 percent year over year — led by the professional/business services sector (year over year growth above 5 percent). Paced by strong absorption, industrial vacancies continue to slide and are just above 12 percent from their recessionary peak near 18 percent. Ten-X predicts vacancies falling close to 10 percent in 2018 before popping back to 11 percent in 2019. Effective rent growth will continue accelerating with gains in the mid-3-percent per annum range through 2018 before falling modestly in 2019.

Nashville

Nashville’s metro employment soared to an all-time high, currently 3.3 percent higher than a year ago, with strong gains in the education/healthcare sector. The professional/business services sector has done even better, with employment rising to an all-time high some 6-percent north of a year ago. Population growth is more than double the national rate and accelerating. Vacancies have fallen from a cyclical peak above 11 percent to just above 6 percent currently and will continue to slide as completions remain limited (falling to 4 percent in 2018 before climbing to the mid 5-percent-range in 2019).

Memphis

Metro employment in Memphis has grown by 1.4 percent over the past year, though it’s still 2.7 percent below its prior cyclical peak, having not yet recovered the losses from the recession. The outsized transportation/utilities sector has performed better, with employment reaching a new cyclical high 2.3 percent higher than a year ago. Vacancies have dropped close to 13 percent from their peak above 17 percent, due to lack of supply additions and demand driven by national and global economic conditions. Rent growth did decelerate in 2015 to 2 percent, though it is expected to pick up again as the market tightens.

Los Angeles

Employment is at an all-time high, having grown from 2.2 percent from one year ago, while unemployment is fallen from its peak (though still remains above the national average at just under 6 percent by the end of 2015). Payrolls there have risen 3.3 percent year over year and the L.A. is also boosted by a booming hospitality sector. Industrial vacancies here were just over 3 percent at the end of 2015, nearly half of their recessionary peak, and will dip below 3 percent in 2017-18 before climbing to the mid 3-percent range in the 2019 stress test. Rent growth also will be robust through 2018 before dipping in 2019. NOI is constrained here as the market already faces low availability, leaving little room for occupancy improvement.

Austin

Metro population is growing at more than triple the national rate. Explosive economic growth has helped put Austin’s employment at an all-time high — still showing growth — rising 3.7 percent year over year, which is fueling strong industrial absorption. As a result, vacancies have slid to 8.5 percent, which is half their recessionary peak and on par with the U.S. vacancy rate. Industrial vacancies will continue to dip to the mid-4 percent range in 2018 before climbing to 6 percent in Ten-X’s recessionary model.

The Industrial Sector’s Top Five Sell Markets*:

Houston

Low oil prices are taking their toll on Houston’s economy, as employment growth tumbled across the final six months in 2015, with jobs now up just 0.8 percent year over year. Slowdowns in the professional/business services sector have helped result in an uptick in unemployment (rising 80 bps from its cyclical low to 5 percent, which is more in line with the U.S. average). Heavy supply and reduced demand stemming from oil prices has kept vacancies stable at 8 percent for the third straight year while rent growth cooled. Vacancies here will rise above the U.S. rate into the mid-8-percent range through 2018 before jumping above 9 percent in 2019.

Dallas

Dallas is doing well despite its exposure to oil and metro employment is at an all-time peak (up 3.6 percent from a year ago). Unemployment is also well below the national rate (at 3.9 percent) and population growth is more than twice the U.S. rate (2 percent in 2014). Still, there is an onslaught in supply here and vacancies measure a shade below 12 percent — well above the U.S. rate — and will remain there through 2018 before rising by 2019. Effective rent growth is slowing and will see just moderate gains in the coming years as availability remains elevated, resulting in NOI growth averaging just 0.6 percent per annum through 2019.

Fort Worth, Texas

Falling oil prices are pressuring Fort Worth’s economy, where employment growth has cooled from an annual pace of 4 percent at the start of 2015 to just 1.5 percent in December. Unemployment, though below the U.S. rate, has climbed marginally from 3.8 percent to 4.2 percent. Manufacturing and professional/business services sectors are contracting here due to exposure to oil. Vacancies have fallen to the mid-9-percent range, however as demand cools in response to oil prices and supply additions remain sizeable, no further improvement in the cycle is predicted. Rent growth also slowed from 3.4 percent in 2014 to just 2.1 percent in 2015.

San Antonio, Texas

Metro area employment is at an all-time peak, up 3.6 percent from a year ago, as San Antonio’s economy continues expanding at a healthy clip. Unemployment (3.8 percent at the end of 2015) is well below the U.S. rate and the professional/business services sector is growing with payrolls gaining 6.4 percent from their year-ago level. A cloud of supply hovers over the city’s industrial market, though, and vacancies have fallen to just below 7 percent from above 11 percent. They will rise into the mid-7-percent range in the comping years as completions come to market. Rent growth sharply decelerated in 2015, measuring only 1.2 percent compared to 2.8 percent the previous year. Rent growth will remain modest in the coming years with vacancies stalling.

Pittsburgh

Pittsburgh’s economy is expanding with employment up a modest 1.2 percent year over year. The metro’s long-term outlook is bleak, however, due to its demographics: population has declined in two consecutive years, most recently down 0.2 percent in 2014. Industrial demand has been dented by low natural gas prices as absorption slowed drastically in 2015. Vacancies fell just 20 bps to 8.8 percent in 2015 and will stay at that level through 2019 (remaining above the U.S. level throughout the forecast). Rent growth measured at tepid 1.5 percent in 2015 and will remain moderate as activity stalls.

*Data source for Top Buy/Sell Markets: REIS, Ten-X Research forecasts.

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About Ten-X

Ten-X is the nation’s leading online real estate marketplace and the parent to Ten-X Homes, Ten-X Commercial and Auction.com. To date, the company has sold 200,000+ residential and commercial properties totaling more than $37 billion. Leveraging desktop and mobile technology, Ten-X allows people to safely and easily complete real estate transactions entirely online. Ten-X is headquartered in Irvine and Silicon Valley, Calif., and has offices in key markets nationwide. Investors in the company include Google Capital and Stone Point Capital. For more information, visit Ten-X.com.